99% Traders LOSE MONEY While SEBI Does Nothing to Help?!
Summary
TLDRThe video discusses a new SEBI report on stock market trading losses, revealing that 93% of retail traders lose money, with the bottom 3.5% losing an average of 28 lakh rupees each. It highlights the high taxes and charges, such as ST and brokerage fees, that contribute to the losses. The speaker criticizes the lack of regulation on advisory services and questions the government's high taxes without adequate awareness programs. The conversation also touches on the geographical spread of traders, the impact of algo trading, and the need for a level playing field in the market.
Takeaways
- 📉 The SEBI report indicates that a significant majority, 93%, of retail traders incur losses in the stock market.
- 💹 Only 1% of retail traders make substantial profits, exceeding one lakh rupees, highlighting the difficulty of making significant money.
- 💸 The bottom 3.5% of traders reportedly lose an average of 28 lakh rupees each, underscoring the severity of losses for some.
- 📊 The report's findings are consistent over the last three years, suggesting a persistent trend rather than an anomaly.
- 🚫 The report focuses on individual traders, excluding large entities like ultra-high net worth individuals who trade through companies to minimize tax liabilities.
- 📈 Increasing taxes on stock trading, such as the Securities Transaction Tax (STT), have risen dramatically in the past decade, with little evidence of the revenue being used for public awareness campaigns.
- 💼 The report does not account for advisory fees, a significant cost for many retail traders who seek tips and advice, potentially exacerbating their losses.
- 🏦 SEBI's licensing of advisory services is questioned, given the low success rate of traders, with concerns about the criteria and effectiveness of such services.
- 🌐 Geographical data from the report shows a higher concentration of active traders in North Indian states, possibly indicating economic motivations for trading.
- 📊 The report emphasizes the use of algorithms by large players, which can create market volatility and may be perceived as market manipulation by retail traders.
Q & A
What is the main topic of the discussion in the transcript?
-The main topic of the discussion is the new report by SEBI on the losses incurred by retail traders in the Indian stock market, specifically focusing on the financial year 2024 and the last three years.
According to the transcript, what percentage of retail traders lose money in the stock market?
-The transcript states that 93% of people lose money in the stock market.
What does the report reveal about the profits of the remaining 6% of traders?
-The report reveals that among the remaining 6% who make money, less than 1 lakh rupees profit is made by most, and only 1% of retail traders make more than one lakh rupees.
How much money do the bottom 3.5% of traders lose on average, as per the report?
-The bottom 3.5% of traders are losing an average of 28 lakh rupees each.
Why does the transcript suggest that the report's findings are not applicable to all traders?
-The report's findings are not applicable to all traders because it only considers individual traders and not those trading through companies, which often includes big clients or ultra-high net worth individuals.
What is the transcript's opinion on the government's increasing taxes on stock trading?
-The transcript suggests that while taxes are increasing, there is a lack of awareness programs for retail traders, and the taxes do not seem to be used effectively to educate people about the risks of trading.
What is the role of advisory services in the losses mentioned in the transcript?
-Advisory services are mentioned as a contributing factor to the losses as many inexperienced traders rely on them for tips, often leading to additional costs and losses.
What does the transcript suggest about the criteria for obtaining an advisory license from SEBI?
-The transcript implies that the criteria for obtaining an advisory license from SEBI may not be stringent enough, as it does not necessarily require proof of successful trading history or profit.
How much money has been lost by retail traders in the last three years according to the SEBI report mentioned in the transcript?
-According to the transcript, retail traders have lost approximately 1.8 lakh crores in the last three years.
What is the transcript's view on the geographical spread of traders in India?
-The transcript suggests that there is a higher concentration of traders from North Indian states, possibly due to economic conditions, and that South Indian states are less represented.
What does the transcript suggest as a potential solution to reduce losses in the stock market?
-The transcript suggests that SEBI could consider banning advisory services for cash market trading and implementing stricter regulations to level the playing field for retail traders.
Outlines
📈 Stock Market Losses and Individual Trading
The speaker begins by addressing a new report on stock market trading losses, highlighting that 93% of retail traders lose money, with only 1% making significant profits. The discussion emphasizes that the report focuses on individual traders and not corporate entities, which often trade through companies to avoid high taxes on profits. The speaker also points out that despite the high losses, the government continues to increase taxes like the Securities Transaction Tax (STT), drawing a parallel to how the government handles smoking and drinking by increasing taxes to fund awareness programs. However, the speaker questions the effectiveness of this approach in the context of stock market trading.
💼 The Role of Advisory Services in Trading
The speaker discusses the role of advisory services in stock trading, noting that many inexperienced traders rely on these services, often incurring additional losses. The conversation questions the criteria set by SEBI for issuing advisory licenses, suggesting that there should be a requirement for advisors to demonstrate their own successful trading history. The speaker also points out that the report does not account for advisory fees, which are a significant cost for traders. The discussion concludes with the speaker's opinion that SEBI should regulate or ban advisory services for cash market trading to protect retail investors.
💵 Transaction Costs and Their Impact on Traders
This section delves into the substantial transaction costs involved in stock trading, such as STT, brokerage fees, and GST, which can amount to thousands of crores. The speaker explains that these costs are not just a transfer of wealth from one person to another but represent a net loss for the system. The discussion highlights how these costs disproportionately affect retail traders, who often bear the brunt of these expenses without realizing significant gains. The speaker also touches on the irony of high taxes on property and equity investments, which are intended to discourage such transactions, while no such measures are in place for stock market profits that are often not taxed or subject to TCS.
🌍 Geographical Disparities in Trading Behavior
The speaker analyzes the geographical distribution of traders, noting that most of the active traders are from North Indian states, with South Indian states being less represented. This observation leads to a broader discussion about the economic conditions in different regions and how they might influence people's propensity to engage in stock market trading. The speaker suggests that economic prosperity in South India may reduce the appeal of stock market gambling, whereas economic struggles in North India might drive more people to seek quick solutions through trading.
🤖 The Influence of Algo Trading on Market Volatility
In this segment, the speaker discusses the impact of algorithmic trading on market volatility, suggesting that large hedge funds use algorithms to manipulate markets, causing rapid and significant price fluctuations. The speaker calls for regulatory measures to level the playing field for retail traders and prevent market distortions by big players. The conversation concludes with the speaker reflecting on their own trading performance and the varying degrees of success among different segments of traders, emphasizing the need for a balanced approach to trading that considers both individual and systemic factors.
Mindmap
Keywords
💡Eundo
💡SEBI
💡Retail Traders
💡Losses
💡Profit
💡Tax
💡Advisory Services
💡Algo Trading
💡Geographical Spread
💡Transaction Costs
💡Tax Terrorism
Highlights
SEBI's new report reveals 93% of retail traders incur losses.
Only 1% of retail traders make significant profits exceeding one lakh rupees.
Bottom 3.5% of traders lose an average of 28 lakh rupees each.
The report is based on individual traders, not corporate entities.
Government's increasing taxes on stock trading despite high losses.
Question raised on the effectiveness of SEBI's advisory licenses.
50% of traders in the financial year are new, indicating a reliance on tips and advice.
Transaction costs, including brokerage and taxes, are significant and add up to thousands of crores.
1.8 lakh crore lost by retail traders over three years, with a significant portion going to taxes and brokerage.
The geographical spread of traders shows a higher concentration in North Indian states.
Use of algos by large entities to potentially manipulate the market is a concern.
The need for a level playing field and regulations to prevent market distortion.
The speaker positions himself outside the 93%, 6%, and 1% categories as he trades through his company.
The speaker will share his personal trading performance by October 2.
Transcripts
hello everyone uh today the Talk of the
Town is uh se's new report on eundo
trades and uh it is going all over the
places so I thought let's get it
clarified uh with Mr PR Sund sir sebi
has come out with a new report on the
eundo losses so how are you seeing this
can you please elaborate it see the C
has come out with this kind of report
earlier also uh there are some changes
last time they came out with the last
one year report uh where they said about
89% of the people lose money about 6% of
the people you know make money enough to
cover their charges so which means that
totally on a net basis 95% people lose
money only 5% make money out of that 5%
also only the top 1 person make good
amount of money the remaining people you
know just make some small
money now this report you know they've
given two separate report one for the
financial year 24 and the other one is
for the last 3 years the last three
years also it is more or less matching
this time they said 93% people lose
money and uh you know uh remaining 6%
you know they make money less than 1
lakh rupees profit so only 1% of the
retail Trad us make more than one person
one lakh rupes per but what is more
disturbing they say that about the
bottom 3.5% of the people on an average
they are losing 28 lakh rupees perom so
that's something very very
dising second thing
though uh this report you know uh
looking very shocking but we must also
understand that retail people
most of the retail people trade in their
individual name so this report is based
on the individual Traders usually the
big people Ultra clients they don't
trade in the individual name because you
know if they make a good profit they
will be required to pay very high tax so
they will be trading uh through a
company okay so this report is only
based on the individual Traders not the
companies okay right so therefore this
uh report is definitely uh looking
shocking but at the same time uh
naturally the question come to the mind
you know if so many people are losing
then why the government keeps on
increasing the taxes the St has been
increased I think 500
600% uh during the last 10 years St has
been increased four to five times in the
last four five six years so government
can give caution rights so for example
if people smoking or people drinking so
people government can't stop drinking or
smoking so they can increase the taxes
so I think that is the way that they're
increasing the sdt can we look at that
way see if you're talking about smoking
right uh the government want to how a
normal government should behave right uh
people are smoking that is very bad so
we need to create awareness among the
people we need to teach the people about
bad things about the smoking so to
create that awareness not to conduct
program awareness program we need money
so we don't have the money so therefore
we charge more tax on the cigarettes
that whatever the more tax is coming so
that money is being used to create
awareness but what happens in India you
know they just keep on increasing the
tax I don't think that they spend that
money for creating awareness so if this
is the case you know what is the
awareness that has been created among uh
retail people I'll give you one
example this report is only taking into
account the statutory charges the people
are paying people are paying brokerage s
St Duty those things only but however
this report does not take into account
one very important charge that people
spend advisory fee every time Dick and
Harry is running an advisory every day I
receive five to 10 calls sir we are
providing tips I used to ask what tips
you will provide sir we will tell you
which call option to buy which put
option to buy right so the question
is when the sebi knows that almost 99%
people don't make money why the sebbi is
giving so many licenses to people to run
this
advisory now next question okay now if
somebody is doing very well somebody's
has the capacity he want to help other
people nothing wrong in giving them
license know so that the people can be
benefited but what is the criteria for
that so does SE has any criteria like
you know tomorrow you want to go and get
the advisory license do they ask you
okay what is a guarantee that your
advice will work have you traded in your
own account at least for last 3 years
can you show me your trading profit
they're just putting some parameters
like educational qualification or
previous experience all the research and
certification has prescribed that but it
is not uh effective or it is not very
elaborate uh in the sense see you know
Indian education system you know a
person can you know mug up everything
can go to exam can pass the exam right a
person has passed the exam it doesn't
mean that he knows everything about the
stock market right and I I know one
trainer who who teach the people okay
and he has made about 80 CR rupes last
year but he himself doesn't
trade okay and but here the report says
that nobody's making profit so then what
is the criteria say for example if you
if let us say you want to teach okay I
plus two I remember how to set up a
nuclear reactor there is a lesson in
physics so people teach but they can't
go and set up a nuclear reactor that is
a different story but the thing is you
know uh the teacher teach number one the
teacher has a prescribed
qualification right that is a theory
part he gives as a student I'm also
receiving only a theory
part okay but if tomorrow the same
teacher come and tell me okay you do
this you take this you put it here you
you take atemp you do this then your
nuclear reactor will come definitely I
will ask the teacher what is your
experience have you set up a nuclear
reactor
yourself so teaching learning is
different but when I to do practically
you know the the question comes so here
you know first thing is that no I'm not
against teaching because I'm also
teaching I'm also trainer right in
training what we do okay you can do this
you can do this you can do that is a
teaching but we don't tell okay you buy
this call option you buy this put option
and every day I receive five to 10 calls
so okay fine let us say that you know
somebody has a skill he doesn't want to
trade he want to help okay fine but are
they asked to keep a record of the calls
that they provided and how much is the
profit made or how much is the loss made
right is there anything so you know uh
in the same C report it says 50% of the
Traders are new traders in this
financial year so they have never been
in a market so how come you know like
out of a total of approximately 1 CR
Traders 50 lakh Traders are new traders
who have no experience until last year
how can can they be professionals here
so definitely you know these people are
paying money to somebody getting the
tips right and in addition to the loss
in the market they are also losing money
to these advisory companies so in my
opinion the first thing what if the SE
is very much interested in ciling in
reducing the volume in fendo the first
thing the sebi should do they should
stop they should ban The Advisory on F
if any anybody want to do advisory let
don't do it for cash market right that's
a investment right for trading there
should not be any advis advisory
companies so coming back uh to the
earlier discussion what are the
transaction costs involved in this whole
scenario the number seems to be thousand
10,000s of crores and it is very
mindboggling numbers can you elaborate
on that see many people say you know
somebody's loss is somebody's gain that
is not true true if somebody is losing
100 rupees that 100 rupees is not the
gain of somebody else because this guy
who is losing 100 rupees also he has to
pay St stem Duty brokerage GST
everything the guy who is getting the
profit on the other side also he has to
pay s St D everything so therefore
whatever the money is lost okay then you
have to minus that
charges whatever the remaining comes
only that becomes is not a zero some
game is not a zero Su it's a negative Su
right so the SE report says during the
last 3 years about 1.8 lakh CR has been
lost by the retail people but it does
not mean that you know non- retail
people are the little bit of retail
people that 1% people it's not that they
made 1.8 lakh CR okay there St stamp
Duty GST exchange charges you know
brokerage so The Brokerage you know so
all this add up to about 50 to 60,000
crores The Brokerage alone in last 3
years is 25,000 crores right and just
imagine there are only five six top uh
broking companies in India and at the
end of the day they are the only people
who are making money exchange charges
exchange charges for 10,800 crores so no
matter now now we can understand why the
shares of BC and NC are hitting hitting
new highs all the time because one side
people are happy if their Shares are
going up on the other side people are
crying that they are losing a lot of
money into on the fundo
trades see share prices are going up
it's a cash market so cash Market has
nothing to do with no I was just
referring to the share prices of BC NSE
brokerage like Angel one etc etc so they
uh if you haveed if you have invested
money in those shares also then trading
also at least you know when you're
losing money in trading you gain
something there but the problem is that
most of the people who come to the
trading they are not invested they only
trade TR yes so that is a issue so the
thing is you know so much of money is
getting out of the system I'll just give
one example 1.8 lakh CR is been lost out
of that 1.8 lakh CR about 60,000 CR
would have gone for St st2 brokerage
this and that that remaining is 1.2 lak
CR and out of the 25 30,000 CR would
have gone to government k Inc tax right
okay now when we are talking about the
income
tax we have to talk one thing very very
specifically here very
interesting tomorrow suppose you want to
buy one property
abroad and or you want to go for some
medical or you want to education now the
government says you know uh we will
deduct tax uh tax collected at source
it's called TCS right recently broughten
yeah and for property and Equity
investment the TCS is so high it's 20%
if I want to send one CR 20 lakh you
know government will take away and I
will get it after one year two year when
I file the return right there is so much
tax terrorism in India but look what is
happening on the other side and uh more
than one lakh CR okay is
being made profit made by F and neither
they pay any tax to
India and nor they have any
TCS and most of the biggest problem is
that if you ask the government why did
you bring 20% TCS they will say no no uh
you may go and buy property abroad
you'll be sending lot of money right but
you are giving only Indian rup we have
to supply the dollar and we are a third
world country we don't have so much
dollar how can we supply all the dollars
to the people so that's why we want to
discourage that's why we put 20% EES but
if that is the logic one lakh CR is
given to
F this one lakh CR f are making the
profit they'll be taking it out when
they take it out the RBI will have to
supply the dollar so RBA happily
supplying the dollar right and the
government does not insist ECS the
government does not insist income tax so
do you say that like f should be brought
into the tax net in fundo trading that
is for government to decide but what I'm
saying that you know you are torturing
the common man and you are helping the
billionaires right so is it right or not
you
know I would say no if you're not
interested in taxing the F at least I
will say you reduce the tax for Indian
common people why so much of sat why so
much of stem Duty why so much of tax why
so much of GST right so but this is how
the things work right most of the people
a command man suffers one or two rich
people take away everything no TCS no
corporate tax no income tax know dollar
is being supplied so that's how
capitalism works right so yeah that that
that that's a thing right so is it right
or not okay so in this report uh like SE
has given some more details there is a
geographical spread among the Traders so
can you please elaborate on that or what
is your inference from this geographical
spread
uh see uh being a South Indian uh I feel
little bit Happy by looking at this
report because the report says you know
uh if you look at the top 10 states and
out of the top 10 states nine states are
North Indian states only one state
Karnataka but again Karnataka there will
be mostly nor Indian settled in in
Karnataka so it's a Cosmopolitan Society
so you know this shows that you know
somehow I feel feel you know uh see if
you talking about the gambling right
there are two aspects in gambling I know
two people do the gambling as far as I
know one somebody is working making very
good money uh feeling lot of stress just
to release the stress you go to gambling
and spend some money okay that's okay
other side somebody's having a lot of
problem in life to solve that so he got
so much depth so what he thinks you know
he go to gambling he can make more money
he can solve his problem but that is not
the truth he can never solve the problem
but that's how the people think right so
uh you see generally it's what I feel
South Indian states are economically
prospering right that is why here the
people don't go for gambling but North
Indian States especially utar Pradesh
you know they are not economically doing
well so they are seeing you know coming
to stock market you know making good M
but most of the people are from Gujarat
and Maharashtra is what the number
States yeah Gujarat Maharashtra you know
uh like utar Pradesh you know the these
are madya Pradesh Rajasthan so there are
so many states in the top 10 right so
somehow I feel that you know the people
are you know I always say you know most
people think you know uh stock market is
the solution to their financial problems
but the fact is that the stock market
will add to your financial problems so
that's what the people should understand
okay so this report also gives more
emphasis on alos so people like SE has
stated that whoever has used alos had an
edge would you like to add more about
this yeah yeah there were some reports
you know this people like Jan Street and
million Hedman they bring a huge amount
of capital they use the algo to distort
the market
so this video is being shot on Tuesday
now even today also uh Bank Nifty shot
up 250 Point and then fell 350 Point all
in 3
minutes right all this is being done by
algo right if somebody want to place a
big order I know or sliced order you
know okay manually that is not possible
if they taking the help of the computer
that is okay right see what is at the
end of the Al go instead of you are
doing manually you are asking the
computer to do the job right so that is
okay but the thing is the fact is that
you know most of the retail people feel
that so these big people using the algo
to manipulate the market why the hell
Bank Nifty has to shoot up 250 Point and
fall in 250 Point in just one minute so
are the market inefficiencies are being
exploited by an higher hands or bigger
hands yes yes definitely that that's
that that is what most of the people
feel that's what I also feel but I heard
that you know countries like America if
somebody want to dist the market you
know there will be a system you know if
somebody go and put a sell order for 500
CR the order will not go to the exchange
it will be sliced stopped it will be
sliced you know so there must be some
system to make sure that you know uh
this kind of huge hedge funds they
cannot disturb the market so can we
expect uh sebi to come up with some
rules or regulations that will allow
everybody to to play in a very Level
Playing kind of AE first let the sebi
have time to do all these things okay
because the sebi chairman itself is
having some problem so if they do it we
will be very happy because at the end of
the day we are talking in the interest
of retail people right okay so in this
report uh we saw three uh segments uh
93% of or in loss and 6%
less
than small profit profit and 1
percentage are really making profit so I
want to know where do we exactly stand
are you in the 93% or the 6 percentage
or in the 1 percentage block okay uh to
be honest with you I'm neither in 93%
nor in 6% nor in 1% okay uh basically
this report is for individual Traders
I'm not an individual Trader I'm not a
retail Trader I'm not an individual
Trader I trade through my company right
so therefore I will be coming under the
other side of the spectrum but however
since you ask me you know uh where do I
stand okay uh maybe this is we are
coming closer to the end of September
right so September 30 the half the
financial year will be over so as on
September 30 so what is my profit or
loss okay by 1st October the data will
be ready uh maybe I'll make a video I
will release that video on uh October 2
uh G gandi jti thank you sir thank you
for your views I hope uh we will
continue this discussion next week with
some more interesting questions thank
you sir yeah sure thank you
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